LEADING ARTICLE:Failure to grasp politics of greed

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It didn't take long for Clare Spottiswoode to fall from grace in the eyes of the world. As our protector against Cedric Brown and the avaricious monopolists of British Gas, the gas industry regulator was clearly on the side of Good. And then yesterday morning the story appeared suggesting that there had been a Fall - that angel Clare had put in for a whacking 65 per cent pay increase, from the already huge sum of pounds 70,000 to the stratospheric amount of pounds 110,000.

Outrage, in the shape of the Shadow Chancellor, took to the air. The public would be angry, he said, that nurses were getting 3 per cent and regulators were asking for 21 times that. All day union leaders and politicians queued up to heap obloquy on the head of Ms Spottiswoode. Neighbours were tracked down by news agencies and revealed the existence of the chauffeur- driven car, the country house and even (oh, the lack of loyalty!) that the regulator may have a gas hob, but she uses an electric oven.

It is unfortunate, to say the least, that the gas industry regulator should appear to be trying to get an immense pay hike at a time when the the remuneration of gas industry executives has become such a potent political issue. So why has she done it?

Theory A says that this is a nasty case of what Americans call "regulatory capture" - where the regulator goes native and assumes the habits and habitats of the regulated. If you continually deal with the preposterously greedy, are you not likely to become contaminated yourself?

That is unfair, say the proponents of Theory B. Ms Spottiswoode was brought in from minding her own computer software company and asked to do three days a week at the present salary. Now the job is full time and she should receive a good whack to compensate her for the changed terms of the contract. This will bring her more or less into line (perhaps slightly above) with her regulatory brethren in the electricity, water and telecommunications industries.

There is much to be said for Theory B. If the going rate for the part- time job was x, it makes sense for it to be x plus y if the job becomes full time. It also cannot be wholly wrong for regulators (who have similar jobs) to have similar rates of pay. Nor is it really surprising that highly stressful and skilled jobs, requiring a detailed grasp of markets and consumer matters, should be paid competitively. It could well be that if the full facts were known then Ms Spottiswoode would be a less attacked and beleaguered figure.

There are two caveats to be entered, however, before we wholeheartedly endorse this way of looking at the world. First, it would help us to sympathise with the regulator if the whole business of paying her and her colleagues were made - you've guessed it - transparent. If there is a rate for the job then we should be told what it is and how it was arrived at.

The second caveat is less principled but just as true. Ms Spottiswoode and co must realise that to the vast majority of people pounds 70,000 is a huge sum to earn in a year - and pounds 110,000 almost unimaginable. To expect to go from one to the other in a single leap is very bad politics indeed. If she grasps this, she may yet rise again in our esteem.

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